Recession causing employers to modify employment practices

A new survey of workplace trends was published in June 2009 by the Confederation of British Industry and recruitment consultants Harvey Nash. The survey indicates that a significant number of employers have made or are considering making changes to their policies in the areas of pay, organisation of working time, recruitment, training and relocation, in response to the current economic crisis.

A survey entitled Employment trends 2009: Work patterns in the recession (1.6Mb PDF) was published by the Confederation of British Industry (CBI) and recruitment consultants Harvey Nash on 23 June 2009. The survey was conducted in April and May 2009 and generated responses from 704 organisations, together employing around three million workers, in a range of sectors of the economy across the UK. Key findings are highlighted below.

Pay and bonuses

The survey found that a majority of employers (55%) were planning a pay freeze during their next pay review and a further 39% were planning a modest review only. This builds on evidence recently published by the pay monitoring body Incomes Data Services (IDS) on the incidence of pay freezes (UK0906039I).

However, the study also found that 62% of organisations surveyed had maintained their bonus structures, although almost a quarter had reduced the average value of their bonus schemes. In light of the recent crisis in the banking sector, the survey notes that it is ‘perhaps unsurprising’ that restructuring and reduction in the value of bonus structures was most common in the banking sector.

Redundancy packages

A majority of organisations (90%) had retained the value of their standard redundancy packages –overall, the average cost of redundancy payments per employee was just over GBP 12,100 (€14,080 as at 16 July 2009).

Recruitment

In terms of future recruitment plans, the survey found that 61% of respondents had a recruitment freeze in place, either across the whole or part of the organisation. Respondents were also asked about graduate recruitment, and indicated that this was still important to them. However, 38% of respondents had frozen graduate recruitment and a further 10% were recruiting fewer graduates than during the previous year. Some 34% of organisations nonetheless revealed that their graduate recruitment policy was unchanged this year, and around 75% of organisations in the public sector and in professional services – such as law and consultancy – had not frozen graduate recruitment.

Working patterns

The survey found that the majority of respondents (62%) had made, or were planning to make, changes to the way that they organise working time in order to save costs. For example, 69% of organisations had either increased or were planning or considering increasing flexible working. Furthermore, 43% of organisations had reduced paid overtime, 33% had reduced their use of temporary agency workers, and 26% had cut some shifts. In addition, 17% of respondents had introduced short-time working and 13% had closed down sites. Short-term working was most likely to have been implemented in the manufacturing sector (38% of respondents, with a further 11% reported to be considering this measure).

The survey found that smaller organisations were less likely to have changed working patterns, with the exception of their use of temporary agency workers – it found that 28% of smaller employers had either increased or were planning to increase their use of temporary agency workers. The report indicates that smaller companies are more reliant on temporary workers and warns that the UK government ‘should be mindful of this dependence as it transposes the EU agency workers directive into UK law’ (EU0811029I).

Offshoring

Just over a quarter of respondents (26%) revealed that they had moved, or were planning or considering moving, jobs or operations overseas in response to the current recession. This trend was most marked in the science, technology and information technology (IT) sector, where 31% of respondents had moved jobs or operations overseas and 22% were planning or considering such moves.

Training and skills

Finally, the survey asked about organisations’ training plans and found that 56% were maintaining or increasing the level of investment in training, and 44% were reducing it. Training strategies were being refined in order to weather the downturn: two thirds of organisations indicated that they were targeting their training more effectively, and 49% were providing more on-the-job or internal training in preference to external training provision.

Commentary

This survey provides an interesting overview of how organisations in the UK are reacting to the current recession. From the evidence presented here, it is clear that organisations across the country are modifying pay, recruitment, working time and training policies in an effort to cut costs and target their resources more effectively, in order to weather the economic crisis.

The impact of these modifications will have repercussions across the UK economy, in areas such as overall employment and graduate employment levels, skills levels, as well as the incomes levels of the UK workforce as a result of pay freezes and cuts in working time.

Andrea Broughton, Institute for Employment Studies

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